The sustained growth of non-agricultural employment and the
transfer of part of the rural labour force to the towns have made
it possible to stabilize the number of agricultural workers and
halt the growth of population pressure on the land, thus creating
the conditions for improved labour productivity and peasant
incomes, industrialization has been accompanied by a rapid rise
in the demand for food and in agricultural prices, creating
profitable outlets for agriculture and thus increasing purchases
of industrially produced goods.

Reducing pressure on the land

In spite of a particularly high population growth rate. 3.4%
p.a., employment targets were practically attained in the 1970s
and first half of the 1980s.

Between 1967 and 1984, the working population increased at an
annual rate of 4.3% or 1.602.000 persons. Between 1966 and 1980,
according to the Ministry of Planning, some 1.5 million new jobs
were created, which meant that everyone coming on to the labour
market could be offered a job.

Thus, the sustained economic growth was able to meet the
social demand for employment and begin to reduce the pre-existing
volume of unemployment. The number of new jobs rose by about 6%
p.a., absorbing all the annual growth in the labour force.

In 1966, the population census gave 610.000 unemployed:
433.100 in the rural areas (65% of the total) and 177,000 in the
urban areas, plus 262.900 people seeking their first job, making
a total of 873,000 unemployed, or an unemployment rate of almost
30%. By January 1983, the number of job-seekers was 563.948, as
against a total employed figure of 3,632,594. Thus, between 1966
and 1983, the number of unemployed had fallen in absolute terms.
Despite the increase in the working-age population over the same
period the unemployment rate had fallen from 30% to 13.4%.

Interestingly, the employment situation had been reversed in
favour of the rural sector, the percentage of unemployed falling
from 65% in 1966 to 18% in 1983 due (as indicated below) to the
high demand of the building and public works sector, the bulk of
whose labour force originates from the rural areas. Industry's
share in total job creation was small: an average of 20.000 jobs
p.a. between 1966 and 1984, or approximately one job in six.
Services (that is, all activities other than material ones)
provided the highest percentage, rising from 31% in 1966 to 38%
in 1984. The greatest number of jobs in services were created
between 1980 and 1984, which explains the relative fall in
industrial employment from 17.2% in 1977 to 13.8% in 1984 and the
fall in the number of people in the material production sectors.14

Despite a relatively high annual growth of 11% p.a.,
industrial employment is well below that of partly industrialized
countries where it accounts for between 20% and 30% of the total
working population. Industrial production, apart from
hydro-carbons, rose at a similar rate, some 10% p.a.

These data indicate the limited character of industrialization
during the 1970s and should go some way towards dispelling the
oft-repeated suggestions that industry received too much
attention at the expense of agriculture- when agricultural
stagnation is not blamed on the growth of industry. Neither can
the capital intensity of industrial investment explain the low
volume of industrial employment. The average cost per job in
industry was 380,000 AD (US$70 to 80,000), varying from 600,000
AD in the ISMME to 110,000 AD for the textile industries
(Confère Etude de l'Agence Nationale pour l'Aménagement du
Territoire, 1985).

In reality, the rate of investment in industry was much less
than it seems. Hydro-carbons were in first position, totalling
some 30% of the financial resources invested over the 1970s as a
whole. This was due partly to the function of financing
development assigned to hydro-carbons which constitute the sole
source of external receipts. Hydro-carbon and natural gas
resources have been used to sustain the programmes for importing
capital goods needed for industrialization and other sectors of
the economy.

In fact, the principal phase of industrialization - the
construction of a capital goods sector- has not yet even begun
and has so far received less than 10% of industrial investment.
The first core of industries, set up during the 1970s, still
requires a significant volume of imports of intermediate and
capital goods in order to function. According to Algeria's
Ministère du Commerce, of total imports for 1979, 1980,1983 and
1984, capital goods' share was 43%,38%. 37% and 33% respectively.
For the same years, raw materials and semi-finished products'
share was 35%, 36%, 38% and 39% respectively. Combined totals for
both types of goods were: 1979,78%; 1980,74%; 1983, 75% and
1984,72%. This situation considerably limits the local productive
system's autonomy from the outside world.

The experience of countries that have embarked on accelerated
industrialization shows that three or four decades is needed to
crystallize all the investments into an integrated industrial
system. Poland, an underdeveloped European country before the
Second World War, in three decades reached tenth place among the
industrialized countries of the world. In Yugoslavia, between
1950 and 1980 industry grew at an annual average rate of 8.6%;
and in China. 10% for three decades.

The number of non-agricultural jobs was enough to absorb
virtually all the natural population growth, both urban and
rural, but it did not lead to an absolute decline in the number
employed in agriculture. (In Europe, this began to decline at the
end of the 19th century (c. 1880), thus making possible an
increase in area per worker and helping to fuel rises in labour
productivity.) Despite a sharp relative decline in the
agricultural population, from 49.6%, in 1966 to 22% in 1983, the
number employed in agriculture changed little over the period
1966-85 (852.000 in 1966: 692.000 in 1977: 854.000 in 1983: and
1.010.000 in 1985).

But non-agricultural activities' soaking-up of the demand for
jobs did make it possible to stabilize agricultural population
numbers and prevented increased pressure on the arable area.

This apparent stability in terms of population and land,
however, does not account for the same socio-economic reality.
Rather than many farmers abandoning agricultural activity and the
land being concentrated in the hands of middle peasants, as has
been observed in a number of countries, there has been a gradual
shift of the agricultural population towards holding two jobs or
part-time employment. A degree of industrial and administrative
decentralization helped the creation of non-agricultural jobs in
the rural areas to such an extent that by 1977, only some 51% of
the population was engaged in agriculture, and by 1984 only 37.7%
- barely one employed worker in three- as the percentages
according to the Office National des Statisques show: 1977. 51%;
1982. 46.2%, 1984, 37.7%. In the same document, percentages of
rural population engaged in building and public works were: 1977.
16.06%; 1982. 19.1%: 1984, 21.54%; and in the same years, the
rural population employed in industry was: 10.6%, 8.4% and 9.1%
respectively.

In fact, more generally, rather than farmers doing two jobs it
would be more accurate to speak of a variety of sources of joins
and income among members of farming households. Given the limited
available arable areas and population density, 70% of holdings
are less than 10 hectares, and the majority of peasants cannot
produce enough for their own subsistence. In other words,
production is lower than the cost of maintaining the worker and
his family. The potential number of those who would migrate from
the rural areas and agricultural employment if non-agricultural
employment were to grow rapidly is thus extremely high. It is
well-known that it is the top of the economic cycle, with the
growth of employment opportunities outside agriculture, that
promotes this movement of the working-age population.

The spread into the rural areas of industrial activities
associated with the development of social and economic
infrastructure, and administrative, communication and
socio-cultural facilities, has made it possible so far to keep
the bulk of the non-agricultural population outside the trig
urban centres.

The rural population grew on average by about 2% p.a. over the
period 1966-84 which, given the land situation, shows that there
was a moderate amount of rural out-migration, probably less than
half the natural population increase, which is estimated at 3.2%,
slightly less than 1966 when it was 3.4%.

There was more social and geographical mobility among casual
agricultural workers, landless peasants, the total number of whom
fell from 622.500 in 1966 to 114.000 in 1977, while the number of
permanent workers in the public agricultural sector rose from
187,800 in 1966 to 192.604 in 1977. The fall in the number of
rural workers in the 1970s also affected family workers, the
number of whom fell from 214,000 in 1966 to 52.768 in 1977. In
percentage terms, the urban/rural distribution of the population
for the years 1966, 1977, and 1984 was, urban: 32%, 41.2% and 43%
respectively: and for the same years, rural: 68%. 58.8% and 57%
respectively.

The spatial distribution of industries, and of public
investment more generally, has proved an effective means of
fighting against the rural exodus. While the import-substitution
industries of the first phase of industrialization (textiles,
leather) were labour-intensive and created to mop-up pockets of
unemployment that had built up in the large and medium-sized
towns, the programme of small and medium industries scattered all
over the country affected virtually all the largest provincial
towns. This policy had the effect of keeping the bulk of the
surplus agricultural population in place by offering it
employment outside agriculture. The agricultural exodus15
was achieved without migration or involved only short-distance
migration.

Relations between industrialized towns and the rural areas
have restructured the regional space to favour agriculture by
keeping the population on farms and increasing the incomes of
peasant-worker groups. Conversely, as Prenant notes, urban growth
around tertiary activities has tended to be parasitical on the
rural areas.

As the Second Four-year Plan (1974-77) got underway, most
urban centres were in a position to fill the increased number of
job vacancies from their own natural increase. As early as 1974.
Prenant observed a more rapid growth of towns in the hinterland
and the fact that numerous small centres were taking on urban
functions. He could thus observe that:

The urban growth currently underway in Algeria seems to be
marked less by the mushrooming of the big towns than by many
small centres taking on urban functions. Sometimes the
functions lead to the demographic growth of localities that
previously had small populations, perhaps even villages
created to receive these functions, sometimes on the contrary
they urbanize already existing large settlements of the rural
population and give them, or restore to them, an urban
character.

Food demands and price increases

The rapid expansion of wage work among the economically active
population - 70% of the total employed population - put strong
pressure on the demand for food. It is estimated that this rose
by 4-5% p.a. throughout the 1970s.

In common with all the oil-producing countries, revenues from
hydrocarbons made it possible to improve the level of the
population's food consumption. The daily calorie intake, scarcely
more than 2.000 (2.100) in the 1960s, had risen to 2.500 per day
by the late 1970s, with a very marked reduction in the
differences between rural and urban areas. The improvement in per
capita daily calorie intake was both quantitative and qualitative
since meat and dairy products, eggs, fruit and vegetables account
for a high proportion of food consumed. Thus, per capita meat
consumption rose from 8.2 kg to 15 kg over the period, and milk
consumption from 34 to 61.3 kg: such a rapid rise in demand
necessitated increasing quantities of imports.

The proportion of local production in total consumption has
diminished continuously since the 1970s. For the principal basic
staples, agriculture supplies only a small proportion of needs:
as statistics for 1982 show, the basic daily intake was largely
covered by imports: 75% for wheat; 70% for pulses; 80% for
vegetable oils; 50% for milk products and eggs; 100% for sugar.

The quantity of imports rose on average by 8% per annum,
reaching a total value of 9.200 billion Algerian dinars in 1983,
equal to slightly less than US$ 2 billion, as against receipts
from hydro-carbons of some 13 billion dollars in the same year.

Contrary to what has happened in many countries, however,
these imports have not been an obstacle to the growth of total
production. Measures were taken to protect domestic agriculture
from the effects of world markets and to increase peasant
incomes.

Imports were limited to basic products (wheat, vegetable oils,
dairy products and sugar) which account for most of the calorie
and protein intake of the bulk of the population and for 80% by
value of imports. Leaving aside this group of products, and some
additional imports of beef, mutton and lamb, local production has
not had to face competition from imported products, total supply
exceeding demand.

Protection of local agriculture from world markets is also
assured by delinking consumer prices from producer prices. For
some products producer prices are higher than both the prices of
imported commodities and consumer prices. This is the case for
wheats and pulses, vegetable oils (olive oil), milk, eggs and
potatoes. The state subsidizes both production and consumption,
production subsidies tending increasingly to replace consumer
subsidies following the increases introduced in 1983-84.

The fact there are two sources of supply- imports and local
production - and two price systems- fixed prices and market
prices- has led to the establishment of a dual organization of
markets and circuits for distributing food products.

There is a relatively integrated state network that includes
firms importing, processing and packaging products, and a chain
of distribution outlets; and a network of private businesses,
made up of several tens of thousands of wholesalers and
retailers. State trading, conducted essentially in the cities and
main provincial towns, distributes basic commodities that fall
into the category of products whose prices are fixed
administratively: cereal products, pulses, vegetable oils and
sugar purchased by the state on the local market or imported.
Private trade distributes the bulk of the products of domestic
agriculture, particularly red meat, fruit and vegetables, at
market prices.

More than the producer price policy, however, it is the global
weakness of supply compared to demand that gives local production
its most secure advantage. Imports are not quantitatively
sufficient to affect the prices of domestic products. This
limited availability, or relative shortage, which often takes the
form of interruptions of supply, makes it possible to market all
local products at market prices, which are distinctly higher than
the prices fixed by the state. It also has the consequence of
limiting the consumption of certain basic imported products such
as cereals, eggs, pulses and potatoes.

Given the structure of relative prices and wages, households
ought to have consumed more milk, eggs, cereal products and
pulses than they do today.

Thus in the event of a price rise, when one product is
replaced by another, the replacement cannot always be the
cheapest but a product that is available even at higher prices.
As a result, there is no competition between imported products
and local commodities and the price level is fixed independently
on the two markets - state and private. Depending on its origin
and the distribution network involved, the same product can be
available simultaneously at different prices: imported red meat
is sold at 35 dinars/kg, local meat at 100 dinars: imported
potatoes at 2.5 to 3.0 dinars, local potatoes at 5.00 dinars:
reconstituted milk at 1.30 dinars, local fresh milk at 5.00
dinars.

This structure of supply has so far made it possible to sell
local products at very high prices, and facilitated a major
transfer of the social surplus, mainly to the benefit of private
agriculture which holds control of some 15.000.000 hectares or
pasture and grazing devoted to rearing sheep and cattle, almost
65% of the irrigated areas are devoted to the production of
vegetables and fruits.

While these measures as a whole acted as an effective
protection for local production, they nevertheless led to an even
closer integration of the system of production and consumption
into world markets.

High demand, at high price levels, for fruits, vegetables and
red meat, led peasants to turn away from such basic staples as
wheat, pulses, and oilseeds, because relative prices, as a result
of strong demand emanating from high income groups, made it more
profitable to produce fruits, animal, and market-garden crops.
The rapid rise of agricultural prices has also slowed down
improvement in the population's real consumption, increasing the
relative share of the household budget devoted to foodstuffs at
the expense of other consumer items.

In 1980, households had to devote a larger share of their
expenditure (57%) to foodstuffs than in 1968 (41.6%) for a still
inadequate nutritional level. Consumption has not yet reached the
level (3.000 calories) beyond which there is a relative decline
in the share of food expenditure in the household budget.16

The continuous rise in the relative share of food expenditure
reflects the effect of the inflation of food prices rather than
any rise in real consumption. For an equal food level, about
2.500 calories. Tunisian households spend only 41% of their
expenditure on food. The consumer price index in Algeria rose on
average by 15% p.a. between ]968 and 1980 (6% in Tunisia over the
same period) whereas household incomes rose by about 12% p.a. (at
current prices). Compared to the evolution of per capita
expenditure which makes it possible to eliminate the effect of
household size, the elasticity coefficient of food demand rose
from 0.944 in 1967 to 0.999 in 1980, which reflects a high and
rising average propensity to consume.

With 2.500 calories, the quantitative limit has not yet been
reached, since it can be observed that all groups' consumption of
foodstuffs is rising, whatever the income band considered. The
demand for food remains largely unsatisfied and consumption
continues to rise faster than production.